North's banks told to be more upfront about charges

The North’s big four banks were told today that they need to be much more open about the charges they impose on customers to stimulate competition.

They must also make it much easier and cost-free to switch accounts from one bank to another.

The Competition Commission published for consultation its proposed remedies package designed to increase competition in the market for personal current accounts.

The Commission has been investigating the banks since receiving a so-called super complaint almost two years ago from the Northern Ireland Consumer Council and consumer group Which?.

They alleged personal banking customers in the North were being “ripped off” by charges which were not imposed by banks in the rest of the UK and that the charges were too similar across the four banks.

Last October, provisional findings said customers in the North paid more for banking and received lower rates of interest, and there was a lack of clarity on charges which were unduly complex.

In an attempt to sweep away any confusion, the commission proposed banks would be required to:

:: Use easy-to-understand descriptions of personal current account (PCA) services;

:: Provide clear explanations on the levels of charges and interest rates and how and when they are applied – available, on a regular basis, when the charges are made as well as when opening an account;

:: Provide better information on statements, including details on charges and interest rates;

:: Provide to each customer an annual summary of charges and interest payments;

:: Give customers at least 14 days’ notice of charges and debit interest incurred from the date of their monthly statement before they are deducted from their account;

:: Send an annual reminder to customers about their right to close their account or switch it to another bank;

:: Introduce improvements to the switching process, including offering a charge-free and interest-free overdraft facility to new customers for at least three months. If that is inappropriate for certain customers, banks must guarantee to refund any costs incurred from failures in the switching process, regardless of the cause.

The Competition Commission said it considered the measures would be “practical and effective in increasing competition in the market, to the benefit of customers”.

It added that it considered its chosen package of remedies went to the heart of the matter and would “be effective in stimulating the emergence of a more competitive PCA market in Northern Ireland”.

The proposals have been put out for consideration and comment until March 20. The Commission said it hoped to publish its final binding decision in May.

Implementation by the banks must be completed by April next year.

The four main banks covered by the report are the Ulster Bank, Northern Bank, Bank of Ireland and First Trust – but the Commission intends extending the regulations to others operating in the North.

It said it had decided its package of remedies should apply to all banks that have more than 10,000 personal account customers with a postal address in the North.